Both the New Mexico and Albuquerque economies finally are delivering what appears to be sustainable job growth, but don’t uncork the champagne just yet.

Economists with the University of New Mexico Bureau of Business and Economic Research and with Moody’s Analytics agree the conditions that have been dragging the economies down are improving, but the engine required to drive economic growth has yet to engage.

“One of the biggest things we’ve seen, and one of the reasons the Albuquerque economy is growing so much better, is construction payrolls are finally coming back,” said Dan White of Moody’s in a telephone interview Wednesday from his West Chester, Pa., office. White is a former economist with the New Mexico Legislative Finance Committee.

The decline in housing construction has “worked its way out,” but the revival “is only offsetting some pretty persistent declines in manufacturing.”

“Leisure and hospitality (employment) are probably the only real driver we can see now, at least in terms of employment growth,” White said. “An important caveat is leisure and hospitality jobs tend to be low-wage jobs.”

Improving construction and tourism activity have helped boost Albuquerque from the worst-performing area of the state last year to the best-performing metropolitan area in the state this year, he said.

Also helping is that federal job cuts haven’t been as bad in the Albuquerque area as had been feared, White said.

“I don’t expect Albuquerque to remain the fastest-growing area in New Mexico for a significant period of time,” he said. “Most of that is because federal belt-tightening will persist through the fiscal year.”

D.R. Horton workers build homes in Montecito Estates on the West Side last month. Construction payrolls are coming back, according to a Moody’s representative.

BBER Director Lee Reynis told a meeting of the State Treasurer’s Office Local Government Investment Pool Shareholders on Wednesday that she expects employment to grow 1.4 percent in New Mexico this year, 1.7 percent for the next three years after that, and 1.5 percent in 2017. New Mexico’s economy grew 3.6 percent in 2006.

The pool, managed by the State Treasurer’s Office, invests funds on behalf of local governments, which are the shareholders. They meet regularly to review the pool’s performance and receive updates about the economy and regulation.

New Mexico lost 52,000 jobs between early 2008 and late 2010, and employment growth since then has been minimal, Reynis said.

But there has been “sustained growth in the number of jobs” in the past few months, she said, primarily because “the things that were pulling us down are less important than they were before,” including construction and government employment.

The mining sector – which includes oil and gas production, copper and potash mining, and other extraction industries – is expected to add 7,000 jobs by 2016, Reynis said.

And the federal Affordable Care Act will inject significant new money into the health care employment sector, which should lead to a 15,000-job increase in the health care and social assistance sector in that period.

Manufacturing, which employed more than 40,000 people in the mid-1990s, employs about 30,000 today. Reynis expects 31,000 manufacturing jobs in 2016.

Nationally, the economy is clearly improving, but “the question is why?” JPMorgan Chase economist James E. Glassman told the shareholders meeting. “We have every reason to believe the economy is going to gain speed.”

One reason is that the United States, alone among the world’s largest economies, confronted its economic problems as soon as they appeared, he said.

American homeowners owed from $2 trillion to $3 trillion more on their homes than they were worth after the 2008 financial panic, Glassman said, a level that could have destroyed the economy.

But markets quickly discounted the value of securities backed by subprime mortgages. The economy took a severe hit, he said, but unlike the European and Japanese economies, the hit came quickly so the recovery process could begin.

“The nightmare is over in the real estate market,” he said.

The market needs 1.5 million new homes this year, which should create 1 million jobs, Glassman said.

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